Outlook 2019: Mike Tae, Broadridge
Mike Tae is the head of strategy and M&A at Broadridge.
What does 2019 have in store for blockchain?
The financial services industry is developing use cases in distributed ledger technology, but the evolution to productization is still in its nascent stages. There are still many challenges and concerns that need to be ironed out before we will see widespread adoption and commercialization of the technology.
For example, a clear regulatory framework and standards need to be established in various key areas, such as cash on ledger, fiduciary responsibilities regarding digital assets, privacy and GDPR concerns, to name a few. Moreover, we will need to see some form of standardization to regulatory frameworks across jurisdictions to have consistent views on the treatment of digital assets.
Another area of uncertainty is in data management. Data sovereignty models across jurisdictions need to be designed, and DLT data security needs to be developed in a manner consistent with capital markets requirements.
Lastly, another significant issue is interoperability between major blockchain platforms, especially for fungibility of digital assets native to different protocols. Broadridge is platform-agnostic, and we plan on fully-supporting any platform that is best for our clients. Eventually, we’ll need these platforms and solutions to talk to each other. I think we’ll see that in the next 18 months.
Will innovation drive alpha in the coming year?
Innovation trends in next-generation technologies like AI, blockchain, cloud, and digitization are dramatically transforming companies worldwide.
We see this acutely in financial services, with the challenge of shifting consumer trends, evolving regulatory pressures, and disruptive business models affecting participants across Wall Street. The ability to embrace these technology trends, and leverage them to drive higher performance, will separate the winners from the losers.
Will Fintech investments rise, plateau, or trail off in 2019?
Innovation and technology will only expand, not diminish, its impact across financial services. Related investments will follow this trend, and we have seen this as a critical strategic lever of operational spend for many established financial services players including banks, broker-dealers, asset managers, and other wealth providers. As just one example, our industry is expected to spend more than $4 billion on cognitive/AI systems in 2018, according to the IDC Spending Guide, and this number should grow in 2019.
Real-time settlement is the key benefit of blockchain-based processes.
Crypto-focused firms are expected to use their high valuations to buy TradFi firms.
The shared private ledger from Baton Systems enhances settlement speed and efficiency.
Customers can have accelerated treatment of financial transactions, exchange and storage of data.
Project Jura explored cross-border settlement of tokenised assets on a DLT platform.